What do you understand by assessment year and previous year in the context of income tax?

According to income tax law, the previous year is when income is earned. On the other hand, the assessment year is when the income earned is assessed. In other words, income earned this year is taxable in the next year and is also known as the assessment year. According to the layman’s language, the current financial year is the previous year. For example, 2020-21 is the previous year, and 2021-22 is the assessment year.